Entities that hold interests in, or in relation to, two or more petroleum projects can apply to the Resources Minister for those projects to be combined and treated as a single project for petroleum resource rent tax (PRRT) purposes if certain criteria are satisfied.
The projects that are combined are specified in a combination certificate issued by the Resources Minister.
For PRRT purposes, a petroleum project is taken to exist if there is a production licence in force. If an entity holds an interest in, or in relation to, an exploration permit or retention lease, a petroleum project does not exist for PRRT purposes. These interests cannot be combined with an interest in a petroleum project.
Note: Specific combination rules apply to the Bass Strait project. The North West Shelf project cannot be combined with any other project.
How to combine projects for PRRT
Entities that want to combine petroleum projects for PRRT purposes need to lodge an application with the Resources Minister within the qualifying period.
The Resources Minister will not accept or comply with an application unless it is from either:
- an entity, or
- entities that together are entitled to receive at least half of the receipts from the sale of petroleum or marketable petroleum commodities (MPCs) produced in relation to each of the projects they want to combine.
The Resources Minister will use specific criteria to consider whether the petroleum projects in the combination application are sufficiently related to combine.
Qualifying period
The qualifying period is the timeframe in which the application to combine petroleum projects needs to be submitted to the Resources Minister.
The qualifying period in relation to a petroleum project is 90 days after the latest production licence comes into force. The Resources Minister may extend the qualifying period.
The Resources Minister must make a decision on the application within 90 days. However, this period may be extended if the Resources Minister needs additional time to consider whether the petroleum projects should be combined.
Resources Minister
Under the PRRT, the Resources Minister has the authority to combine petroleum projects by issuing a combination certificate. They first consider whether the petroleum projects are sufficiently related by applying a set criteria.
The combination certificate comes into force when it is issued. However, this does not mean that an entity has to lodge separate PRRT returns for any pre-combination petroleum projects in the year of tax that the petroleum projects are combined.
Any assessable receipts derived, or deductible expenditure incurred, in relation to the petroleum projects before combination are included in the PRRT return for the combined petroleum project.
Criteria for combining projects
The criteria the Resources Minister considers in working out whether projects are sufficiently related to one another in order to be combined are:
- the operations, facilities and other things that comprise, have comprised or will comprise, that petroleum project and any other petroleum project (or projects) existing at the time at which the production licence came into force
- the entities that (either directly or through other entities) carry on or provide, carried on or provided or propose to carry on or provide, the operations, facilities and other things referred to above
- the geological, geophysical and geochemical and other features of the production licence areas in relation to the petroleum projects.